What question did this study set out to answer?

This paper aims to identify key factors that determine systemic risk in the European banking sector, contrasting size with interconnectedness.

Unravelling Systemic Risk Determinants in the European Banking Sector: Is it Just a Matter of Size?

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This analysis identifies interconnectedness and balance-sheet factors influencing systemic risk in European banks, suggesting regulatory reforms.

This paper aims to identify key factors that determine systemic risk in the European banking sector, contrasting size with interconnectedness.
Reviewed literature on systemic risk determinants in banking.
Applied a LASSO-enhanced regression model using panel data.
Analyzed interbank exposures and balance-sheet factors among European listed banks.
Interbank exposures significantly increase systemic risk, especially during crises.
Bank size has a non-linear effect on systemic risk levels.
Excessive capital in banks may lead to increased risk-taking behavior.

Torre et al. (2026) studied this question.

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This analysis identifies interconnectedness and balance-sheet factors influencing systemic risk in European banks, suggesting regulatory reforms.